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Five simple steps to getting your German tax refund

It can’t be avoided – wherever you live, taxes are a certainty. However, the taxes we pay provide an enormous benefit to society, in that they provide a social safety net.

Five simple steps to getting your German tax refund
Photo: Getty Images
Nowhere is this more evident than in Germany, where the wealthiest can expect to pay up to 45% in 'Lohnsteuer', or income tax. Unemployment benefits, pension payments and ‘Kindergeld' (literally ‘child money') for parents are all significant benefits paid for by German taxpayers. 
 
Filing a tax return in Germany is not compulsory (unless you fit into a few select categories). You'd be crazy not to however! With the tax-filing app Taxfix, a return typically takes under half an hour to complete – and the average person gets back more than €1,000. If you're an expat and unfamiliar with how German tax deductions work, you could easily be paying more than your fair share of tax. Here are five simple steps to help you make sure you get your return in on time – and get back all the money you're entitled to. 
 
 
1. Gather your paperwork – and keep it in order 
 
Germans prize organisation and good record keeping as a virtue, and if you follow them in this respect, you'll be well-prepared for tax season. Firstly, do you know the final deadlines for filing a tax return? The last chance to file for 2016 comes on December 31st this year, as part of a four-year rolling cycle.
 
Using a single folder for each tax year and a hole punch will often suffice to keep your receipts and invoices in order, with dividers for different categories, such as fuel receipts, energy bills, food expenses during business trips, and software.
 
If you're intent on reducing your paper waste, there are a number of apps, such as Simple Scan and Microsoft Office Lens, that allow you to photograph your paperwork, turning them into readable PDF files that you can store somewhere on the cloud. This can be handy and a major timesaver at tax time, when you're hunting down figures – new technology means that figures can often be copied and pasted from these files directly. 
 
 
2. Keep up to date on what you can claim.
 
The federal government in Germany often updates legislation regarding what people can claim as deductions against their tax. There are always attempts to close loopholes and maintain tax revenues. Generally, your everyday, regular travel costs to work can be claimed, as can a percentage of home office costs such as internet and power bills. 
 
Other common tax deductions for employees include business literature and work equipment. Personal deductions can be made for a variety of things, including health insurance premiums, childcare expenses up to the age of 14, and charity contributions.
 
Depending on what you do, professional insurance that you may have taken out can also be claimed. However, it pays to check websites such as the official federal government Make It In Germany site for updates in the lead up to tax season. If you're genuinely confused about what you can claim, any tax adviser should be able to help you for a minimal fee. 
 
 
3. Get the help you need in an app (in English!) 
 
Paradoxically, Germany's complex tax system has given rise to a number of apps, websites and services that streamline the process of lodging a tax return. Multiple popular services, including Taxfix, use a series of guided conversational questions to lodge your return, calculating your estimated return based on the answers and data that you provide.
 
The apps work with Elster, the German government's tax return software, to process your return speedily. While you can also file a paper return, and some prefer this method, electronic services save not only time, but a significant amount of paperwork. 
 
Each of these electronic tax services have different strengths – Taxfix especially has been designed with the needs of expats in mind. All questions are in simple, direct English and have been drawn up to make sure you get back all the money you're due under German law. The app aims to make it simple for everyone to claim their full tax refund, even with no prior tax knowledge – so you won't be confronted with confusing jargon!
 
Photo: Taxfix
 
4. Don't rush it – time really is money
 
You can easily feel overwhelmed or confused by the rules of the German tax system. While the temptation may be to click through each question in an app as quickly as possible, you can save potentially hundreds of euros by reading each question carefully, and ensuring you can justify each answer with your records. Even doing so, it won't take anymore than an hour at the most – and isn't that worth a chunk of money landing in your account?
 
5. Avoid hidden costs with a transparent service
 
The amount tax accountants charge can vary wildly. With Taxfix, all costs are set and transparent. If your estimated return is under €50 and you're not obligated to make a return, submitting via Taxfix is free.
 
If your estimated refund is over €50 (or you're obligated to file), there's a single fee of €39.99. That's it. Furthermore, this fee can be claimed against your next return, as tax consulting fees.
 
Ready to find out if you're due a tax refund? Taxfix is available via their website and their app, which can be downloaded from both Google Play and the Apple App Store. Try it out today to see how much money you could get back.
 
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TAXES

EXPLAINED: How to save money on your taxes in Germany

Einkommensteuererklärung - or income tax declaration - may well be one of the most terrifying words in the German language. But with several available deductions, you may want to file even if you don’t have to. We spoke to experts to find out how to do it.

EXPLAINED: How to save money on your taxes in Germany

In a crowded field, few things feel as bureaucratic in Germany as the tax code. But as with so many things here, there’s an advantage in planning a bit ahead of time, and keeping the right paperwork as you go along. From my own personal experience having paid tax in Canada before moving to Germany, many of the possible deductions you can get here might not be available where you’re originally from. That’s why it’s worth checking to see what you can save money on.

It’s currently tax season: the 2020 tax return deadline for those who use an adviser or Steuerberater is May 31st 2022 (it was extended from December 31st 2021 due to the pandemic). Meanwhile, many residents in Germany will have to file their 2021 tax returns by the end of July, with extensions available to those who use a tax advisor.

And, While some salaried employees with very straightforward cases may be able to get away without filing one as their taxes are often simply deducted straightaway from their monthly pay, it often pays to do it. 

READ ALSO: German tax deadline extended due to Covid pandemic

Who has to complete a tax return in Germany?

Perhaps most obviously, self-employed freelancers and small business owners resident in Germany have to file a German tax return every year. But so do a host of other people. These include married partners with big differences in income, people claiming certain welfare benefits, or people with multiple sources of income – such as those who might have a salary and rental income. If you don’t fall into any of these categories, you can still file a return and get some money back.

A calculator next to a tax return form.

A calculator next to a tax return form. Many people can get money back from submitting a tax return. Photo: picture alliance / dpa | Oliver Berg

What job-related expenses can I deduct and how can I prove them?

It’s not just the self-employed who can claim a host of tax breaks. If you’re a salaried employee, you may also be able to claim everything from job-related clothing to training courses you’ve paid for yourself and not been able to claim as expenses with your employer. If you buy a work-related book or subscribe to a trade magazine your employer doesn’t reimburse you for, you can deduct that from your tax burden as well. The costs of membership in professional organisations are also fair game.

“Any form of job-related development course is tax deductible, whether you’re a freelancer or not,” says Claudia Müller, Founder of the Female Finance Forum and author of Finance, Freedom, Provision. The way to financial independence. “Also, if you had to travel to the course, you can keep the train ticket and hotel receipt. The dates on them will obviously correspond to the course date—so you can clearly prove you took the trip for professional development and claim the travel costs.”

READ ALSO: Everything you need to know about your German tax return in 2022

Müller also advises keeping the receipts for job-related clothing, although claiming that as an expense is easier for some professions than for others. For example, a chef can easily argue their uniform, if they have to pay for it themselves, is something they won’t wear outside of work. Other cases are less straightforward.

“Clothing is a bit tricky because men can theoretically wear a suit to a non-work related occasion, like a wedding. So they won’t be able to hand in those receipts. But women sometimes can deduct certain business clothing they really wouldn’t normally wear outside of work,” says Müller.

With the Covid-19 pandemic having made home office more common in Germany, both employees and freelancers can deduct furniture, computer, stationary, and Internet costs, among others. 

What household-related costs can I deduct?

When I had a dishwasher technician come to my home for a repair recently, he told me I’d be getting a long receipt via email and that I should save it for my tax return. Having had no such available tax credit when I lived in Canada, I was curious about what else might qualify. It turns out plenty does – whether you rent or own the place you live in.

“As long as you’re using a cashless payment, such as a wire transfer, you can claim some of the costs of household-related services like gardeners and cleaners – or maintenance costs such as home repairs or a visit from your chimney sweeper,” says Dirk Maskow, an independent tax consultant based in both Berlin and Düsseldorf.

A man places dishes inside a dishwasher.

A man places dishes inside a dishwasher. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

“If you rent your place and your landlord passes on any service costs to you, the tenant, they’re obliged to provide you with the necessary statement, which you can use as documentation.”

READ ALSO: Everything you need to know about paying taxes in Germany

What family-related costs can I deduct?

Germany is a country that prides itself on its family-oriented social safety net. That’s part of what makes its tax code so complex, but there’s plenty of possible credits for different life situations. Parents can claim an allowance for each child until they turn 25, and even longer if they can prove their enrolment in higher education for adult children older than 25 – even if they’re living away from home.

Two-thirds of childcare costs are tax deductible too. “For that, again, make sure you keep all the receipts and don’t pay by cash—so you can prove exactly what you paid and when,” says Maskow. “Public schools are of course free in Germany, but even about 30 percent of private school fees – up to a maximum of €5,000 – are tax deductible too.”

It’s not just institutional education or childcare you can claim either. In Germany, even certain babysitting expenses are tax deductible. “You can even get the children’s grandparents to come over and deduct travel costs,” says Müller. “If they need to take the train to come look after the kids, make sure you save the receipt.”

Certain out of pocket healthcare costs might also be tax deductible in certain cases. “My tax advisor always asks me for our medical expenses, right down to if we went to the dentist and got a cleaning,” says Kathleen Parker, Managing Director of Red Tape Translation. “The right filing system can make a load of difference to help keep track of it all. If Excel and paper isn’t cutting it anymore, there’s lots of great cloud-based software that can help you out.”

Vocabulary

Tax – (die) Steuer

Wage Tax (what employees have taken off their pay) – (die) Lohnsteuer

Tax return or tax declaration – (die) Einkommensteuererklärung

Tax consultant or advisor – (der) Steuerberater/(die) Steuerberaterin

As with all of our tax and financial summaries, this is a guide only and should not be taken to constitute specific and tailored financial advice. For tax advice which is personalised to your situation, please contact an accountant or tax specialist. 

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